Boehly has proven his critics wrong before, including those who said he paid too much for the Dodgers. And though he’s the one most associated with the new ownership, it’s Santa Monica, California-based Clearlake, a private equity firm, that has the largest stake with a 61 per cent interest, though voting rights are evenly split.
“Iconic sports properties require overpayment on the day they’re bought to be made up over time,” said Marc Ganis, co-founder of Sportscorp, a Chicago-based advisory firm. “He understands marquee franchises do not come up often and that their management, and the future of the industry, would make the price paid look very good a few years hence.”
Boehly was part of a group that bought Bruce Springsteen’s music catalogue last year for $US550 million. Credit:AP
Boehly declined to comment for this article, but told an audience of private equity investors in June that England’s top football league is significantly undervalued.
“They don’t realise how big their opportunity is,” Boehly said at the Berlin event. “We are starting to realise the power of these platforms.”
Boehly is worth $US6.1 billion, according to the Bloomberg Billionaires Index, which puts him in the range of other Premier League Club owners, several of whom are fellow American financiers. Still, he’s not as wealthy as Abramovich, while the Gulf royalty that own Manchester City and the Saudi sovereign fund behind Newcastle United are in an entirely different league as his consortium.
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Few outside Wall Street knew much about Boehly until about a decade ago when he teamed with his business partner, Guggenheim’s Mark Walter, to buy the MLB’s Dodgers for $US2.15 billion. Last year, the pair acquired a stake in the NBA’s Lakers, and Walter is also part of the Chelsea ownership group.
Boehly’s main sporting interest had been wrestling. Growing up in Maryland, he attended the all-boys Landon School and was a member of the team that won back-to-back Interstate Athletic Conference championships. He studied at the College of William and Mary, where he met his wife, Katie, and also at the London School of Economics.
He started in finance at Credit Suisse Group, then moved to venture capital firm JH Whitney & Co. before joining Guggenheim in 2001 to develop their credit business.
His most important transaction came in 2010, when he led an investor group that acquired Security Benefit Life Insurance, a Kansas-based annuity provider. Using a $US50 million loan from Michael Milken, Boehly bought a personal stake alongside Guggenheim.
Milken, the junk-bond pioneer who went to jail for his role in a 1980s insider-trading scandal, was a Guggenheim client, and regulators said the firm breached its fiduciary duty in failing to disclose to investors the personal loan. Guggenheim paid a $US20 million fine in 2015 without admitting or denying wrongdoing.
That same year, Boehly left Guggenheim to start Eldridge. He struck a deal to buy a portfolio of Guggenheim’s assets — including Security Benefit, the Hollywood Reporter and Dick Clark Productions — that formed the initial core of his investment company.
“Iconic sports properties require overpayment on the day they’re bought to be made up over time.He understands marquee franchises do not come up often and that their management, and the future of the industry, would make the price paid look very good a few years hence.”
Marc Ganis, co-founder of advisory firm Sportscorp
Today, Greenwich, Eldridge is valued at about $US8.6 billion, with 69 per cent of the firm owned by Boehly, according to Bloomberg’s wealth index. Boehly’s personal investments, including his professional sports stakes, make up the rest of his fortune.
Security Benefit, with about $US46.9 billion under management, is Eldridge’s most valuable asset, worth $US5.6 billion. It’s an engine that provides a ready source of capital from policyholders, allowing the firm to expand its portfolio without raising money externally. It also reported owning more than $US7 billion in securitizations produced by Eldridge’s affiliate asset managers.
Eldridge’s profits have soared of late. It was expected to earn about $US500 million in 2019, Boehly told Bloomberg that year. That grew to about $US1 billion in 2021, according to a company spokesperson, helping fuel a a surge in acquisitions.
Eldridge was an investor in 16 deals in 2020 and 39 in 2021, according to PitchBook data. It provided financing to Cathie Wood’s Ark Investment Management in 2020, then capped last year by teaming with Sony Group to buy the rights to Springsteen’s songwriting catalogue.
Boehly has proven his critics wrong before, including those who said he paid too much for the Los Angeles Dodgers a decade ago he was part of a group that paid $US2.15 billion for the iconic franchise.Credit:Getty Images
But striking a deal for Chelsea required a different level of speed and scrutiny.
There were 12 “credible bids,” according to Raine Group, the advisory firm handling the sale, which needed to be approved by the UK government. Interested buyers included Ken Griffin, the Ricketts family, Stephen Pagliuca, co-chairman of Bain Capital and co-owner of the Boston Celtics, and Jim Ratcliffe of chemical giant Ineos.
Boehly’s group won, agreeing to pay £2.5 billion for the club and committing another £1.75 billion to its development. One investor with knowledge of the strategy described Chelsea as the biggest distressed sale of the year — one that offered the chance to buy at a 50 per cent discount.
Still, the price paid has raised questions over how Chelsea can be turned into a profitable endeavour, especially in a time frame that works for Clearlake’s investors. While private equity firms investing in football teams is increasingly common, it’s still unusual for them to be the majority owner.
Some buyers have been able to justify the prices paid for teams through canny real estate developments that have helped increase revenue, and Boehly’s group includes London property developer Jonathan Goldstein. But redeveloping Chelsea is complicated — and potentially very expensive. As it stands, the club’s Stamford Bridge stadium is small compared with its direct rivals, with a maximum capacity of less than 42,000.
Another obstacle might be a comparison with the free-spending Abramovich, 55, who shovelled so much money into making Chelsea the glamorous team it is today that by the end of his tenure, the club owed him £1.5 billion. The team also handed out gifts to players, including luxury cars on which it may now owe tax.
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For now, Boehly hasn’t been afraid to splash significant sums on players either, supporting German coach Thomas Tuchel. He and Walter have a history of consistently fielding one of the most expensive teams in the MLB, too. That’s paid off: The Dodgers have reached the World Series three times since their acquisition, winning in 2020, and have the best record so far this season.
“They approached the Dodgers as a big market club that needs to invest big money in order to create big revenues and increase asset value,” Ganis said. “That is the approach I expect Boehly will take with Chelsea as well.”
Bloomberg
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